New rule on women-owned small business contracting draws fire

Advocates of women's business are vehemently criticizing a proposed Small Business Administration rule that would limit set-asides for women-owned small businesses to four industries.

SBA was charged in 2000 with developing a women's procurement program to help agencies reach a goal of giving 5 percent of contracting dollars to women-owned small businesses. Since then, members of Congress and numerous advocacy groups have blasted the agency for delays in implementing the program, but SBA insists that the lengthy and ongoing regulatory process is necessary.

The proposed rule would allow contracting officers to award sole-source contracts of $3 million or less ($5 million in the manufacturing sector) to women-owned small businesses in underrepresented industries. SBA cited a RAND Corp. study in declaring that women are underrepresented in only four areas of government contracting: national security and international affairs; coating, engraving, heat treating and allied activities; household and institutional furniture and kitchen cabinet manufacturing; and other motor vehicle dealers.

Women Impacting Public Policy, an advocacy group in Washington, noted that there are more than 2,300 categories listed by the North American Industry Classification System, and WIPP President Barbara Kasoff called the proposed rule "a drastic step backwards in chipping away at the little progress that women made over the past seven years to gain a mere 5 percent of federal contracts."

"The Bush administration's proposed rule is a slap in the face to women business owners," said Sen. John Kerry, D-Mass., chairman of the Senate Small Business and Entrepreneurship Committee. "We've been trying for seven years to get the administration to end unfair contracting practices. By cherry-picking data, they've not only done nothing to level the playing field, they've actually shut women out of the process for thousands of different types of contracts."

Kerry said he will call on SBA to throw the proposed rule out at a hearing this month.

Defending the proposed rule, SBA spokesman Dennis Byrne said: "This set-aside is one tool to help achieve a goal and was never intended to be the end-all means to achieve the 5 percent mark. Understanding that, the set-aside can help an agency move closer to the goal."

But Margot Dorfman, chief executive officer of the U.S. Women's Chamber of Commerce in Washington, came out against the proposed rule. USWCC has long pushed for implementation of the women's procurement program, including filing suit with the U.S. District Court for the District of Columbia.

In November 2005, the court found that SBA had "sabotaged, whether intentional[ly] or not, the implementation of a procurement program which would have, and will, likely benefit the businesses they represent." The court ordered SBA to develop a plan for implementing the program, but status hearings have showed little progress.

USWCC "believes the recent filing of proposed rules by the SBA, which strips out the bulk of the findings and recommendations from the required national studies, is a continuation of the SBA's active sabotage of the women's contracting program," Dorfman said. "By dragging their feet for seven years and inappropriately narrowing the categories for underrepresentation, the SBA has become part of the problem -- instead of the designated national champion small business."